Linamar Corp. announced Monday it has been awarded a multi-year supply contract that the company estimates will be worth more than $200-million annually once the program is ramped up to full capacity.
The contract, to supply driveline modules to an unidentified "major European auto manufacturer," is scheduled to begin in 2011 and will reach full production in 2014.
"This is a transformational business win for our European group, testament to the dedication and focus of our team to realize our globalization and diversification strategies," Linamar CEO Linda Hasenfratz said in a statement.
"It is also a huge win for our new driveline systems businesses which are levering off a global focus on AWD systems."
The contract is a big win for Linamar, which has been struggling along with most parts suppliers amid a severe slump in auto sales and the worst economic downturn in decades.
This situation is expected to get worse before it gets better, with General Motors planning extended shutdowns at several of its plants this summer and Chrysler's plants closed for two months as the company restructures under bankruptcy protection in the United States.
The federal government has taken steps to provide auto suppliers with greater access to credit and receivables insurance to help them through the downturn, but the Automotive Parts Manufacturers' Association has asked for billions of dollars in loans to help companies survive the slowdown.
Although Linamar's revenue fell 30 per cent in the first quarter, pulling the company to a loss of $12.6-million or 19 cents per share, but Ms. Hasenfratz has said it is big enough and flexible enough to take advantage of takeover opportunities as they present themselves.
The company has more than 10,000 employees in 37 manufacturing locations, five research and development centres and 11 sales offices in Canada and around the world.
Linamar shares were down five cents to $10.45 in early morning trading on the Toronto Stock Exchange.
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